How do you run your finances?
by Antti
I’ve been a big fan of Jason Calacanis for quite some time now. He’s a strong figure coming from the west coast and somewhat controversial according to some. Nevertheless, I do admire him for the things he has done.
One of the reasons he was criticised was for was his controversial blog post about the ways to save money in start-ups. I have to say I understand his points well. I also have to give it to him for the way he is manic about the way a company runs its finances. I’ll let you guys in on a secret that may be very disturbing to some people; one of the ways I supported myself through my studies, other than running my first company, was to keep count of ALL my expenses in an Excel sheet and categorise them in 6 different ways on a monthly basis. The file itself was in essence my personal cashflow.
I never overspent without knowing it and what it would do to me in the short term. This is something I’ve continued to this day (with skipping some months a few years ago). I’m extremely aware of my financial situation all the time, whenever I have to make a choice whether to spend 10 or 200 euros on something. I always know the consequences it will have on me in the following months.
This is something that, in my opinion, should be taught to students in high school (the latest). The reason is simple – being 100% aware of your financial status is probably the biggest factor affecting your social well being in our current society (sad as it is). I’m arguing that if this was something people were aware in the US during the time of the sub prime crisis – the whole crisis would not have happened.
Why do I believe that being fully aware of your financial situation is important on a larger scale? It reduces unknown risk. The capability to take on risk is understandable, but all of the risk involved should be known to the best possible extent.
Talking about financial situations, being able to understand how different issues affect it positively and negatively – is perhaps the best driver for proper wellbeing.